El Dorado Oil Works v. United States

• Decision Date: 22 April 1946
• Docket Number: No. 428,428
• Citation: 66 S.Ct. 843,328 U.S. 12,90 L.Ed. 1053
• Parties: EL DORADO OIL WORKS et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

328 U.S. 12

66 S.Ct. 843

90 L.Ed. 1053

EL DORADO OIL WORKS et al.

v UNITED STATES et al.

No. 428.

Argued March 26, 1946.

Decided April 22, 1946.

Appeal from the District Court of the United States for the Northern District of California.

Mr. W. E. Williamson, of San Francisco, Cal., for appellants.

Mr. Daniel W. Knowlton, of Washington, D.C., for appellees, the United States and Interstate Commerce Commission.

Mr. Allan P. Matthew, of San Francisco, Cal., for appellee General American Transportation Corporation.

[Argument of Counsel from page 13 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court.

Appellants filed a complaint in the district court under 28 U.S.C. § 47a, 28 U.S.C.A. § 47a, challenging action taken by the Interstate Commerce Commission allegedly pursuant to instructions contained in an earlier opinion rendered by this Court in connection with these proceedings. General Maerican Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 60 S.Ct. 325, 84 L.Ed. 361. The district court dismissed the complaint for want of jurisdiction on the ground that the Commission's action did not amount to a reviewable 'order' within the meaning of 28 U.S.C. § 41(28), 28 U.S.C.A. § 41(28). The case is before us on direct appeal. 28 U.S.C. § 345, 28 U.S.C.A. § 345.

The following facts constitute the background of this proceeding:

El Dorado Oil Works, one of the appellants, processes, sells, and ships coconut oil in interstate commerce. Special kinds of tank cars are necessary for that distribution. The appellee, General American Tank Car corporation, ¹ owns tank cars which it rents and leases to various shippers. In 1933, Oil Works made a contract with the Car Company to rent, for a period of three years, fifty tank cars at $27.50 per month, and such additional cars as it might need at $30 per month. The outstanding railroad tariffs, prescribing payment by the railroad of 1 1/2¢ per m le for the use of tank cars, contained rules which provided that the mileage would be paid only to the 'party' whose 'reporting marks' appeared on the cars. During part of the rental period here in question the rules provided that 'mileage for the use of cars of private ownership will be paid * * * only to the car owner—not a lessee.' Since under the agreement the cars were to bear the 'reporting marks' of the Car Company and not the Oil Works, and since Oil Works was a lessee, no tariffs authorized railroad mileage payments to Oil Works. Nevertheless, under the agreement Oil Works was to receive the full mileage allowance prescribed by the tariffs: The rent Oil Works was to pay to Car Company was to be taken out by Car Company from the mileage allowances it received from the railroads and the balance was to be paid by it to Oil Works. The railroad payments proved to be greatly in excess of the rental obligations, and Car Company regularly paid the difference to Oil Works until July 1, 1934.

July 2, 1934, the Interstate Commerce Commission, after an exhaustive investigation, handed down its findings, opinion, and conclusion in Use of Privately Owned Refrigerator Cars, 201 I.C.C. 323. It there drew a distinction between car owners as a class and car renters as a class. It found that car owners must have sufficient rental allowances, whether they rented to railroads or to shippers, to pay a reasonable return on investment, taking into consideration cost of maintenance, idle cars, etc. On the other hand the Commission found that car renters had no such fixed costs. The Commission's conclusion was that costs of rented cars to a shipper, including rent and incidentals, was the maximum allownace the shipper-lessee should receive from a railroad, directly or indirectly, and that if he receives more, the cost of transportation to him would be less than the cost of transportation to shippers generally, especially those who use cars furnished by the carriers. To make the railroad pay more for use of a car rented by a shipper than the rent he had to pay, was, according to the Commission, a violation of Section 15(13) of the Interstate Commerce Act, 49 U.S.C. § 15(13), 49 U.S.C.A. § 15(13), in that it required the railroad to pay more for the car than was 'just and reasonable.' The Commission was of the opinion that refunds of car mileage in excess of the rent charged the shipper-lessee was the equivalent of an unlawful concession or rebate, prohibited by the Elkins Act, 49 U.S.C.A. § 41 et seq. While the Commission's findings were limited to refrigerator cars, it stated that 'the general principles enunciated apply equally to all other types of private cars.' Id., at page 382 of 201 I.C.C.

After the Commission's decision in the refrigerator case, the Car Company declined to pay over to Oil Works any part of the excess mileage. In 1935 Eldorado Terminal Company, one of the appellants acting as assignee of Oil Works, brought suit against the Car Company to recover accrued excess mileage earnings. Car Company defended on the ground that further refunds would violate Interstate Commerce legislation, particularly the Elkins Act. 49 U.S.C. § 41, 49 U.S.C.A. § 41. The district judge found that the contract was in violation of the Elkins Act, and rendered judgment for the Car Company. The Circuit Court of Appeals reversed. El Dorado Terminal Co. v. General American Tank Car Corp., 104 F.2d 903. The Car Company filed a petition for certiorari which was supported here by the Solicitor General and the Interstate Commerce Commission. Their claim that the Circuit Court of Appeals erred rested on the following major grounds: (1) The railroad's payments to Car Company, which provided no facilities to the railroad, were unauthorized; (2) since no published tariff authorized payments to a shipper-lessee such as Oil Works its only recourse to collect allowances for the cars it had furnished, was to institute proceedings before the Commission for recovery of a reasonable allowance; (3) payment to Oil Works of excess mileage earnings received by Car Company would violate the Elkins Act. In reply to the Commission's brief urging certiorari, Oil Works contended that the case did not raise a question 'within the administrative or primary control of the Commission.'

We granted certiorari and reversed the judgment of the Circuit Court of Appeals. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 60 S.Ct. 325, 330, 84 L.Ed. 361. While we rejected the Commission's contention that the district court had no jurisdiction to hear the case, we accepted its contention that determination of the validity of the challenged past practices was for the Commission. We pointed out that the tariffs approved by the Commission fixed no uniform rate to be paid by railroads to the shipper directly for the use of cars originally rented by the shipper. We pointed out further that Oil Works had never 'applied to the Commission for its decision as to what was a proper allowance for the cars furnished by it.' We said that the Oil Works was 'entitled, under the plain terms of § 15(13) (of the Interstate Commerce Act) to be paid by the carrier a just and reasonable allowance' for providing the cars. The opinion stated that questions such as whether the shipper were 'reaping a substantial profit from the use of the cars' and whether, on the one hand the 'allowances and practices' were lawful and reasonable, or on the other hand violated the Elkins Act, were all administrative problems calling for investigation and determination by the Commission. The District Court was accordingly ordered to stay its hand so that the Commission could render its decision.

On remand Oil Works and Terminal Company filed a petition with the Commission praying that it hold hearings and enter an order to the effect that Car Company could pay the mileage earnings to Oil Works without violating the Elkins Act and that such payment would not constitute a rebate or concession. The Commission found that a just and reasonable allowance to Oil Works would be the cost incurred by it in furnishing the cars, namely the monthly rental to the Car Company, that any amount in excess of that would be unjust and unreasonable in violation of sec. 15(13) and would 'constitute a rebate and discrimination and involve a departure from the tariff rules applicable, prohibited by Sec. 1 of the Elkins Act, and Section 6(7) of the Interstate Commerce Act (49 U.S.C.A. § 6(7)) * * *.'² The Commission further ordered that the proceeding before it be discontinued. On this appeal both sides argued the jurisdictional question as well as questions going to the merits.

Before we reach the merits of the controversy we must at the outset briefly dispose of the jurisdictional question. As the facts already stated reveal, the Commission's findings and determination if upheld constitute far more than an 'abstract declaration.' 'Legal consequences' would follow which would finally fix a 'right or obligation' on appellants' part. These findings are more than a mere 'stage in an incomplete process of administrative adjudication,' for the Commission here has discontinued further proceedings. We, therefore, think that the Commission's action falls within the class of 'orders' which Rochester Telephone Corporation v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147, held to be reviewable by a district court of three judges. The district court erred in dismissing the complaint for want of jurisdiction.

On the merits, appellant's major contention is that the Interstate Commerce Act and our earlier opinion in this case do not authorize the Commission to determine, as it here has done, the justice and reasonableness of mileage allowances which appellants were to receive on past transactions. The contention is that both our opinion and the Act authorize the Commission to do no more than determine what uniform allowance shippers as a class would be permitted to charge in the future In part the...